UK Expands Crypto Reporting Regulations to Include Domestic Transactions

The United Kingdom is set to implement new regulations requiring domestic cryptocurrency platforms to report all transactions involving UK-resident users starting in 2026. This move marks a significant expansion of the existing Cryptoasset Reporting Framework (CARF) as global tax authorities intensify their scrutiny of digital assets.

With this change, His Majesty’s Revenue and Customs (HMRC), the UK’s tax authority, will gain automatic access to both domestic and international crypto transaction data for the first time. This initiative aims to enhance tax compliance ahead of CARF’s inaugural global information exchange scheduled for 2027.

Understanding the Cryptoasset Reporting Framework (CARF)

The Cryptoasset Reporting Framework (CARF) was developed by the Organisation for Economic Co-operation and Development (OECD) to facilitate the automatic exchange of crypto transaction data among tax authorities worldwide. Under this framework, crypto asset service providers are mandated to conduct due diligence, verify user identities, and report comprehensive transaction details annually.

Current Focus of CARF

Initially, CARF primarily concentrated on cross-border transactions, which meant that crypto activities occurring solely within the UK were not automatically reported. However, the recent policy paper released by HMRC indicates a shift in this approach, expanding the framework to encompass domestic transactions.

Aims of the Expansion

The UK government’s objective in broadening the reporting requirements is to prevent cryptocurrencies from being classified as an “off-CRS” asset class. This classification would allow them to evade the transparency measures applied to traditional financial accounts under the Common Reporting Standard (CRS).

Benefits of the New Reporting Requirements

This unified approach to crypto reporting is expected to yield several advantages:

• Streamlined Reporting: By consolidating reporting requirements, crypto companies can simplify their compliance processes.
• Enhanced Data Collection: Tax authorities will have access to a more comprehensive dataset, enabling them to identify noncompliance more effectively.
• Improved Taxpayer Assessment: With better data, HMRC can more accurately assess taxpayer obligations and ensure fair tax collection.

Proposed Tax Framework for Decentralized Finance (DeFi)

In conjunction with the expanded reporting rules, the UK government has also proposed a “no gain, no loss” tax framework. This new approach would defer capital gains tax liabilities for users engaged in decentralized finance (DeFi) until they sell the underlying tokens. This proposal has been met with enthusiasm from the local crypto industry, as it aims to alleviate some of the tax burdens associated with DeFi transactions.

Global Trends in Crypto Taxation

As cryptocurrencies continue to gain traction in the financial mainstream, governments around the world are revising their tax codes to more clearly and consistently capture digital asset activities. Here are some notable examples:

South Korea’s Aggressive Tax Measures

In October 2025, South Korea’s National Tax Service announced plans to seize cryptocurrency held in cold wallets and conduct home searches for hardware devices if they suspect taxpayers are concealing digital assets to evade tax obligations. This aggressive stance highlights the increasing global pressure on crypto users to comply with tax regulations.

Spain’s Proposed Tax Increases

Recently, Spain’s Sumar parliamentary group proposed raising the top tax rate on crypto gains to 47%. This amendment would categorize crypto profits within the general income bracket and impose a flat 30% tax rate on corporate holders. Such measures reflect a growing trend among governments to tighten their grip on crypto taxation.

Switzerland’s Delayed Information Exchange

In a contrasting move, Switzerland announced that it would postpone the start of automatic crypto information exchange with foreign tax authorities until 2027. This delay allows the country to determine which nations it will share data with. Despite this postponement, CARF rules will still be enacted in Swiss law on January 1, 2026, although transitional measures are planned to ease compliance for domestic crypto firms.

Innovative Proposals in the United States

In the United States, Representative Warren Davidson introduced a bill in November 2025 that would allow Americans to pay federal taxes using Bitcoin. Dubbed the Bitcoin for America Act, this proposal aims to route these payments into a strategic national Bitcoin reserve while exempting them from capital gains taxes. This innovative approach could reshape how digital assets are treated in the U.S. tax system.

Conclusion

The UK’s decision to expand its crypto reporting regulations to include domestic transactions represents a significant step in the global effort to enhance transparency and compliance in the cryptocurrency sector. As tax authorities worldwide tighten their oversight, it is crucial for crypto users and companies to stay informed about evolving regulations and adapt accordingly.

With the introduction of the “no gain, no loss” tax framework for DeFi users, the UK is also taking steps to foster a more favorable environment for innovation in the crypto space. As we move closer to 2026, the landscape of crypto taxation will continue to evolve, and stakeholders must remain vigilant in understanding their obligations.

Frequently Asked Questions (FAQ)

What is the Cryptoasset Reporting Framework (CARF)?

The Cryptoasset Reporting Framework (CARF) is a set of guidelines established by the OECD for the automatic exchange of crypto transaction data among tax authorities globally. It requires crypto service providers to verify user identities and report transaction details annually.

Why is the UK expanding its crypto reporting rules?

The UK is expanding its crypto reporting rules to include domestic transactions to enhance tax compliance and prevent cryptocurrencies from being classified as an “off-CRS” asset class, which would allow them to evade traditional financial reporting standards.

What is the “no gain, no loss” tax framework?

The “no gain, no loss” tax framework proposed by the UK government would defer capital gains tax liabilities for decentralized finance (DeFi) users until they sell their underlying tokens, providing relief from immediate tax obligations.

How are other countries approaching crypto taxation?

Countries like South Korea and Spain are tightening their crypto tax regulations, with South Korea planning to seize assets and Spain proposing higher tax rates on crypto gains. In contrast, Switzerland has delayed its automatic information exchange until 2027.

What innovative proposals are emerging in the U.S. regarding crypto taxation?

In the U.S., the Bitcoin for America Act proposes allowing taxpayers to pay federal taxes using Bitcoin, exempting these payments from capital gains taxes. This could significantly change how digital assets are treated in the tax system.